After a year's trial of its innovative Lufthansa Express product, the German carrier has cherry-picked parts of the pilot scheme for a revamp of its domestic operation. A poor performance halted the extension of the pilot to the whole system as originally planned.
The German flag carrier was set to introduce its 'new standard' product from the end of October. It retains automated check-in, convertible seats and a simplified cabin service and will introduce window-middle-aisle 'easy boarding' from early 1996. The two main problems with Express were the simplified two-tier tariff system, based on peak and off-peak timings, and the failure to reach the 25 per cent cost cutting targets.
Lufthansa has tried to put a brave face on what the German business press is terming a 'retreat'. On five of the seven pilot routes, Express had to compete against British Airways affiliate Deutsche BA - the introduction of the scheme heralded the start of a price war that both sides say severely depressed yields.
Worst of all for Lufthansa, DBA won market share, admits Dr Holger Hätty, Lufthansa's general manager product management. Measured nationally Luft- hansa's share fell one percentage point to 82 per cent, while DBA's rose from 6.5 per cent to 8 per cent. 'There is an air of failure within Luft- hansa,' says a source close to the carrier. The Express branding will now disappear.
But DBA isn't exactly celebrating either. The depressed yields mean the carrier will not hit breakeven as planned in this financial year, instead incurring its fourth consecutive year of losses.
Source: Airline Business
